Despite arrest of former minister, government focuses on next votes

12:00 AM (GMT -03:00) – Jul 04 2017

Former Minister Geddel Vieira Lima was arrested on Monday by the Federal Police in Salvador, accused of trying to obstruct Operation Cui Bono, which investigates an alleged bribery scheme in loan contracts of Caixa Econômica Federal. The pre-trial detention was authorized by Judge Vallisney de Souza of the 10th Federal Court of Brasília. Away from the Michel Temer government after being accused of influence peddling, Mr. Vieira Lima is suspected of receiving bribes to favor Caixa's loans to business groups at the time he was vice president at the bank's corporate unit under the Dilma Rousseff government. The arrest of Mr. Vieira Lima surprised the Palácio do Planalto, but the government is less concerned with his potential plea deal and more with the contamination of its negotiations on crucial votes: the charge against Mr. Temer in the Chamber’s Constitution and Justice Commission (CCJ) and the labor reform in the Senate.

Federal government spending cap rises by R$40bn

12:00 AM (GMT -03:00) – Jul 04 2017

The 2018 Budget, which will be sent by the government to Congress at the end of August, will be prepared with an estimated increase of about R$40 billion in the cap on federal expenditures, compared to the limit valid for this year. In the calculation, the government considered only expenses subject to the spending cap. Constitutional amendment 95, which established the ceiling, requires that the expenditure of a given year is calculated by the spending cap of the previous year, adjusted for 12-month inflation through June. According to the latest market estimate for last month's inflation (deflation of 0.15%), the 12-month rate in June likely decelerated to 3.08%.

Court overturns collection of income tax on services contracted abroad

12:00 AM (GMT -03:00) – Jul 04 2017

A ruling of the Federal Regional Court of the 3rd Region (São Paulo and Mato Grosso do Sul) has opened an important precedent for companies that discuss the taxation on payment of technical services contracted abroad. In a suit filed by beverage company Ambev, the judges overturned the thesis of the Office of the Attorney General of the National Treasury (PGFN) in defense of the collection of income tax on these operations as a payment of royalties, and taxed at 15%. According to the ruling, the charge is only due in cases where there is some form of transfer of technology or know-how.

Investment banks manage to raise fee revenues by 25% in first half

12:00 AM (GMT -03:00) – Jul 04 2017

Investment banks ended the first six months of 2017 with eye-catching revenue and with their pockets full. Fees paid by companies for transactions with stocks, debt, syndicated loans, mergers and acquisitions yielded investment banks R$1.04 billion, a 25.4% increase compared to the same period last year, according to Dealogic. More than the feeling of an exceptional first half, bankers see the market is returning to normalcy. The low basis of comparison made it easier to beat the 2016 numbers as soon as President Michel Temer's reform agenda began to draw investors’ attention. "We had a first half above expectations," says Alberto Fernandes, vice president of Itaú BBA.

Former Light CEO eyeing potential investments in Rio power distributor

12:00 AM (GMT -03:00) – Jul 04 2017

The former CEO of Light, José Luiz Alquéres, is eyeing investment opportunities in the Rio de Janeiro power distributor, whose control bloc should be put up for sale by Minas Gerais-based utility Cemig. The executive, who was also CEO of Eletrobras and recently stepped down as chairman of the state-owned holding company, said he is waiting for news of Cemig's "real intentions" to sell its stake in Light in order to continue with its studies about the company. But the market has doubts about Mr. Alquéres’s capacity to compete with other financially robust companies. The favorites in a potential auction are Enel, which controls Ampla, the Equatorial group, which has already made a proposal for Light in the past, and a Chinese investor.

J&F tries to increase exposure of Vigor and Alpargatas in ads

12:00 AM (GMT -03:00) – Jul 04 2017

JBS's parent J&F Investimentos has decided to advance this year's media spending initially planned to be disbursed over the second half, and use those funds through July, Valor has learned. This is being done specifically with units Vigor (dairy company) and Alpargatas (footwear maker) and has led to a greater exposure of both brands. In some campaigns on TV, Vigor has occupied spots previously sponsored by meat brand Seara, according to a source. This advancement would be an attempt to expand the exposure of the company's brands during the current asset sales process. Vigor said that it had announced a brand repositioning according to a strategy launched in March, with an investment of R$20 million, and that it should present new ads in the coming months. The company denied it has accelerated its media spending this year.

Marfrig reopens two units and increases cattle slaughter by 25%

12:00 AM (GMT -03:00) – Jul 04 2017

Marfrig has confirmed expectations and announced the increase in its cattle slaughter in Brazil. In a statement released on Monday, the company said it will reopen two meat-processing units that were shutdown in the municipalities of Nova Xavantina (Mato Grosso) and Pirenópolis (Goiânia), and expand production in four other plants located in the states of Goiás, Mato Grosso, Pará and Rondônia. "After the total implementation of these actions, it is estimated that the Beef division’s Brazilian operation will increase its effective capacity by 25% in relation to the current level...", said José Eduardo de Oliveira Miron, Marfrig’s vice president of finance and investor relations, in a statement. Contacted by Valor, Marfrig did not disclose its current daily average of cattle slaughter — in 2016 the company's slaughtering surpassed 2 million head of cattle.

Germany's Euroimmun to produce Zika and chikungunya tests in Brazil

12:00 AM (GMT -03:00) – Jul 04 2017

Germany's autoimmune testing company Euroimmun, which has just been purchased by US-based PerkinElmer for $1.3 billion, is set to operate its first factory in Brazil. The unit, located in São Caetano do Sul, São Paulo, will also be the first in the country to produce Zika and chikungunya tests. Although the initial investment will be relatively low, at R$8.5 million, the new plant will be the only one outside Germany to have a research and development center, said the chief executive of the local operation, Gustavo Janaudis. Biochips will also be shipped to international markets — the idea is to produce the company's 20 best-selling products locally, including Zika, chikungunya, antinuclear antibodies and tissue and cell tests.